adf_test <- ur.df(data$abc_industries_total_sales, type = "trend", lags = 0) why is lag=0 in r

In R, the lags parameter in the ur.df() function of the urca package is used to specify the number of lagged differences of the time series to include in the unit root test.

In this specific code snippet, lags = 0 is used to indicate that no lagged differences should be included. This means that the unit root test will be performed on the original time series data without any differencing.

Including lagged differences can help to remove trends and make the time series stationary, which can be useful for certain statistical analyses. However, in some cases, such as when you are testing for a trend in the original data, it might be appropriate to set lags = 0 to test for the presence of a trend without differencing the data.

It's important to note that the appropriate value for lags depends on the specific characteristics of your data and the hypothesis you are testing. You might need to experiment with different lag values or consult relevant literature or domain experts to determine the appropriate lag value for your analysis.